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November 6, 2013

Americans Still Focused on Saving

Majority keeping up with contributions, but loan activity is up since 2008

Americans continued their commitment to saving in the first half of the year, according to an analysis of recordkeeper data by Investment Company Institute. Just 1.5% of defined contribution plan participants stopped making contributions in the first six months of 2013.

This continues a trend that began in 2011 and continued through 2012 when 1.6% of participants stopped their contributions.

ICI’s report covers data from about 24 million participants. The report found that DC plan assets account for one-quarter of the total retirement market and are approximately one-tenth of households’ financial assets. IRAs take the largest share of the retirement market, followed closely by public pension plans.

The percentage of participants taking loans from their plans was also low. Just 2.1% of participants took withdrawals in their first half of the year, a trend that has held steady since 2010. Less than 1% took hardship withdrawals, again continuing a long-standing trend. The percentage of participants taking hardship withdrawals has held steady at 0.9% since 2009, except for a brief blip in 2011, when it hopped to 1.1%.

Loans, however, were taken at a higher rate than they were five years ago, ICI found. Over 18% of participants had outstanding loans as of the end of June, compared with 15% at the end of 2008.

More than 7% of participants reallocated assets in their plan, while 6% changed the asset allocation of their contributions. The report found the first half of 2009 was a busy time for participants in this respect. More than 9% of participants made changes to their allocation of contributions and 7.7% changed the allocation in their portfolio in that time. Since then, percentages have held steady at around 6% for contributions, and between 6.4% and 7.4% for balances.

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